Digital transformation requires lean thinking
Companies are increasingly interested in so-called “digital transformation”, whether because of the possibilities to rationalize, innovate and create new business models, or out of fear of falling behind established competitors, or new startups that disruptively change the competitive landscape, threatening positions built over many years.
Changes in the habits of customers, who increasingly incorporate digital technologies and mobile devices into their daily lives, combined with the availability of technologies such as: IoT (internet of things), cloud (cloud computing) and data analysis (a series of concepts for processing large volumes of data to generate useful information, such as big data analytics, machine learning and others), open up countless possibilities that have not yet been fully explored.
But for these opportunities to be fully seized, it is important to integrate lean thinking into this effort, so that there is a correct understanding of how digital transformation can really eliminate waste and increase value creation. Disconnected technology initiatives without a clear purpose make no sense. Every effort should begin with a strategic definition of what additional value is to be offered to customers, the basic principle of lean thinking.
Many are feeling their way in this direction, but sometimes setting objectives with a rather limited view: “have our own app to communicate with customers”, “install more robots and automation in processes”, “we need to be more digital”, etc. Others seek to absorb concepts that have been useful in companies starting new businesses, such as lean startup, design thinking, agile practices and others, but often focusing only on the tools in isolation.
For a real competitive leap, a broad understanding of what digital transformation is becomes necessary. Forrester, for example, a highly regarded research and advisory organization in the technology world, offers an interesting definition of digital businesses: those that win, serve and retain customers through the continuous creation and exploitation of digital assets, to deliver new sources of customer value and increase their operational agility.
The definition above is closely aligned with lean philosophy. From our experience supporting pioneering companies on this journey, we have found that digital transformation needs to be integrated with lean transformation, both conditioned on creating greater value for the customer. Below we share five key points we have already observed, which may be useful for those who are starting or advancing their digital efforts:
- Start with a clear purpose
Technologies can create great opportunities, many still undiscovered, and in a way they fascinate companies, leaders and investors. In many companies we see vague slogans that spread a mental model in which applying technologies intensively is the goal. The people involved may be led, for example, into “over investiment”, creating complex apparatus that in the end bring no significant results, because it was not clear what problem was to be solved.
In lean philosophy, any and every improvement must start from a very clear understanding of what value is to be added for the customer and of how each initiative reflects the deployment of the company's strategy, what in lean we call hoshin kanri. The use of all available technologies to innovate products, processes and business models should be pulled by specific positioning and performance objectives. Experiments that generate learning are the essence of lean and should undoubtedly be used, but always with a well-defined direction.
- Learn from customers
Understanding customer needs is always the first step in lean thinking. The greatest opportunities brought by new digital technologies undoubtedly lie in the possibilities they open for companies to have much greater interaction with their customers, making dialogue with them truly two-way and infinitely faster, generating short learning cycles.
The use of augmented reality to test concepts, and the incorporation of communication and intelligence into services and products through mobile devices, IoT and many other means, for example, bring an enormous range of information about preferences, consumption habits, ways products are used and technical support needs. If well used, they can make companies continually rethink their products, services and business models.
Learning about customers and enabling them to learn about your products and services, creating reusable learning, should be a focus of real digital transformation, because it enables the ongoing evolution of your purpose in an agile way.
- Redesign complete value streams
This is sometimes the most visible side of many digital initiatives. In manufacturing, discussions and applications characterized as manufacturing 4.0, smart factory, industrial internet and others are growing. The convergence of technologies has enabled applications in various fields, generating greater efficiency and flexibility. These include, for example: redesigning information and scheduling flows, connecting automated and robotic equipment, real-time management of material flow and equipment maintenance, etc.
The connection with suppliers and the entire logistics chain is also experiencing many new possibilities, with advanced communication and tracking devices feeding intelligent systems for monitoring, adjustment and rapid decision-making.
In services, the possibilities are growing for automating transactional activities with new voice interaction technologies, for example, and even for advanced analysis and interaction through the application of artificial intelligence.
Sometimes we see initiatives to change production and administrative processes, but carried out in isolation. A major risk is automating waste, which makes a prior analysis questioning each step and its real necessity essential (though not always done). Value Stream Mapping tools, well known to those who apply lean, should be expanded to map the customer journey, a concept addressed by Womack and Jones as early as 2005 in their book Lean Solutions. This concept, possibly quite advanced for its time, now has a better chance of being put into practice, facilitated by the new technologies.
Connecting these changes in processes and ways of carrying out operations with the mechanisms for learning from customers is what will truly enable leaps in complete value streams, operating in a pull and flexible way, adapting and responding promptly to consumer demands.
- Transform the entire organization
Digital transformation cannot be limited to small groups segregated from the rest of the company. Initial groups for experimentation and learning are valid, but the perspective should always be: how to integrate these efforts, from the start, with the vision of the future for the whole company.
Real evolution will occur when the changes affect the way everyone in the organization works, how they connect with customers and how they continually innovate and improve the company's processes and business. This requires changes in culture, in leadership style, in the way people are developed and in organizational structure.
- Integrate digital transformation with lean transformation
All the previous items show that digital transformation enhances and relies on several pillars of lean philosophy: focus on customer value, elimination of waste, flexibility, agility, etc. And it depends on transformation in every dimension: purpose, process, people's capabilities, management system and leadership, mental models.
If we understand lean transformation as the application of this philosophy aimed at maximizing value creation for customers so as to achieve business objectives, it is easy to see that real digital transformation cannot happen without being grounded in lean transformation. And that lean transformation can experience a leap in customer service if it properly seizes the still little-explored opportunities of new digital technologies.
